Oil prices recorded a sharp weekly loss on Friday amid the latest round of US tariffs and anticipated US-Russia talks on a Ukraine war ceasefire.
Brent, the benchmark for two thirds of the world's oil, settled 0.24 per cent higher at $66.59 per barrel. West Texas Intermediate, the gauge that tracks US crude, was flat at $63.88 a barrel.
For the week, Brent retreated 4.4 per cent, while WTI shed more than 5 per cent. Year-to-date, both benchmarks are down nearly 11 per cent.
This week's oil price movement was “again” driven by the moves of US President Donald Trump, said Giovanni Staunovo, a strategist at Swiss bank UBS.
“He first threatened high tariffs for buyers of Russian oil – as of now the only one buyer impacted is India – and the added tariffs came in on the lower side at 25 per cent and not 50 per cent or 100 per cent as feared,” Mr Staunovo told The National.
“No secondary sanctions were added on buyers, with market participants for now assuming modest supply disruptions and awaiting more clarity how Indian refineries will react,” he added. “Russian supply is not disrupted currently. Production is limited due to the Opec+ agreement. A truce would not change this, but lower supply disruption risks.”
A meeting between Mr Trump and Russian President Vladimir Putin and has been agreed, a Kremlin official said on Thursday as negotiations on a Ukraine summit gained new impetus. The announcement was made on the eve of a White House deadline for Moscow to show progress towards ending the three-year-old war in Ukraine.
The move signalled a crucial thaw in the two nations' strained relationship, analysts said.
“The market went into a wait-and-watch mode amid the rapidly-evolving US-Russia engagement on the Ukraine crisis,” Vandana Hari, chief executive of Singapore-based Vanda Insights, said.
Mr Putin’s foreign affairs adviser Yuri Ushakov said a summit could take place as early as next week at a venue that has been decided “in principle”, although he did not identify it. Mr Putin later named the UAE as a potential location.
The meeting will be the first between sitting US and Russian presidents since Joe Biden met Mr Putin in Geneva in June 2021.
“For oil, the pivot represents increased probability of a Ukraine ceasefire deal that could lead to the western alliance phasing out its sanctions and embargoes against Russia,” Ms Hari said.
Oil prices had trended upwards since May, peaking on June 19 after Israel attacked Iran, but have fallen since. That, among other geopolitical tensions, has added to market volatility.
On Monday, oil prices dropped after Opec+ agreed to another large output rise.
The alliance of oil producers led by Saudi Arabia and Russia is to increase its oil production by 547,000 barrels per day for September, as it continues to unwind voluntary cuts introduced during the Covid-19 pandemic.
That decision marks the sixth month in a row when the group has raised output as it gradually restores 2.2 million barrels a day of supply that was withheld from the market.
Last month, Opec+ announced a larger-than-expected increase of 548,000 barrels a day for August, accelerating the pace of its phased supply return.
